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Montpelier DTA scheme bulletin

This thread will provide news and information on the ongoing dispute with HMRC over the Montpelier double tax scheme (BN66/s58). It may also be of interest to deGraaf and Steed users.

I will try and post an update every Friday morning, whether there is anything to report or not.

The latest status of the Montpelier Huitson appeal will be updated below.

Huitson -v- HMRC

Last year (2015) Montpelier's appeal was heard at the First-tier Tax Tribunal (FTT). They lost (link to summary of FTT decision) but said they intended to appeal to the Upper Tax Tribunal (UTT).

8th August 2016 - Unfortunately, Montpelier's appeal to the UTT was submitted late. As a result, it is now being referred to a Judge to decide whether permission should be granted for a late appeal. If this Judge refuses permission then Montpelier can appeal his/her decision. The timescales for this are unknown.

4th October 2016 - The Judge refused permission for the late appeal. Montpelier are now appealing this decision, and there will be a hearing within the next 2 months. From what I hear, it is very unlikely they will succeed. Only in exceptional circumstances, like serious illness, are late appeals allowed.

18th October 2016 - Update from the UTT - "There has been no final decision on this late appeal. We are still in the process of fixing a hearing."

30th October 2016 - HMRC have started issuing actual Follower Notices and APNs to people who've received the warning letter.

HMRC's use of "discovery"

If HMRC used "discovery" with any of your years in the scheme, please read on.

Discovery Enquiries (2004 - 2008)

Between 2004 and 2008, HMRC opened enquiries under Discovery. They did this where they had missed the 12-month window to open a normal enquiry.

Discovery enquiries are not valid. There is no provision in the Discovery rules (Section 29 TMA 1970) to make enquiries. HMRC have recently conceded this point.

According to staff at Montpelier, over 300 users received Discovery enquiries between 2004 and 2008.

If you received one of these discovery enquiries you should write to HMRC and request that it, and any associated Closure Notice, be vacated.

Discovery Assessments (2008 onwards)

Also termed “notice of assessment”.

The Discovery rules allow HMRC to raise assessments outside the enquiry window. There are time limits on when they can do this. Normally it is 4 years but they have 6 years where there has been carelessness, and 20 years for deliberate behaviour like fraud.

HMRC started issuing these, after BN66/S58 became law in summer 2008, to users whose tax returns had not been placed under enquiry within the 12-month window. It is not known how many users received them but it is thought to be fewer than the discovery enquiries.

Discovery assessments could be challenged at a tribunal, on the basis that sufficient information was included on tax returns, but the courts have generally sided with HMRC in these cases. In fact, there was a recent tribunal case involving a Guernsey DTA scheme, which was also caught by BN66, where the tribunal ruled that the disclosure of the double tax relief claim on the tax return was not sufficient to preclude a discovery assessment (see decision below). The wording of the Guernsey DTR claim was very similar to what Montpelier put on our returns, so this decision sets a strong precedent. Unlike the Montpelier scheme, the Guernsey scheme had not been disclosed under DOTAS.

There is a more compelling argument against a discovery assessment if a DOTAS scheme reference number was included on the tax return. This is supported by the decision of the Upper Tribunal in the Charlton case. However, for some reason, Montpelier did not include the reference number (64863085) on many returns.

If you received a discovery assessment, or notice of assessment, and the scheme reference number 64863085 was on your tax return, it may be worth a speculative letter to HMRC to see if they are willing to withdraw the assessment.

Hi, I've not been on the forums for quite a while, but I'd like to clarify something based on this info.
FYI - I was 'caught' under the MP scheme and I'm now a paid up member of the NTRT.

If I've received an enquiry notification from HMRC between 2004 and 2008 saying they are going to be looking into a previous years return, then are you saying I can write to HMRC and ask them to completely withdraw it and sign that year off?

Is there a standard letter template that is available for this so I can make sure it's worded correctly?

If I've received an enquiry notification from HMRC between 2004 and 2008 saying they are going to be looking into a previous years return, then are you saying I can write to HMRC and ask them to completely withdraw it and sign that year off?

Only if the enquiry letter says discovery and/or Section 29 of the taxes act 1970.

If the enquiry was opened within 12 months of the filing date then it's valid. The enquiry may refer to section 9a TMA 1970.

I read on another thread about the possibility of retrospective penalties.
HMRC can now change tax rules retrospectively, but can they do this with penalties as well? Would trying to settle now (I've tried for a decade without success) be utter madness or a prudent move?

I read on another thread about the possibility of retrospective penalties.
HMRC can now change tax rules retrospectively, but can they do this with penalties as well? Would trying to settle now (I've tried for a decade without success) be utter madness or a prudent move?